Council officials today confirmed the controversial Cloud building, (pictured), had been ditched because of spiralling costs.

A spokesman said the projected cost of the development had rocketed to #324m from the original forecast of #228m.

Council chief executive David Henshaw said: "The public sector partnership have been determined to ensure that the Fourth Grace would not become a Millennium Dome mark two.

"Spiralling costs would have represented an unacceptable drain on the public purse.

"The project has now reached the point where the Millennium Dome scenario regretably became the most likely."

The spokesman said architects behind the scheme had called for a huge number of new flats to pay for the increasing costs, including 200 apartments in the historic Canning Dock area.

But he insisted the city council was determined to provide a striking development along the banks of the Mersey, in place of what was designed to be a flagship of the Capital of Culture.

Last week the building's architect Will Alsop told a city conference that he would "walk away" if people did not support his enormous, glass, cloud-shaped structure.

He told an audience at the ECHO's BusinessLive conference: "If you want to shoot yourself in the foot and stop this building you are going the right way about it."

Construction was due to start next May after city leaders selected his design gainst the wishes of locals who voted on four options last year.

Today Liverpool Vision chairman Joe Dwyer said: "I am disappointed that we are not able to take this scheme any further.

"I firmly believe that we were right to consider such a hugely ambitious building - it has simply not proved practical or deliverable."

Supporters of the scheme will now go back to the drawing board to produce a leisure, commercial and residential scheme of similar stature.

But they said it was far too early to predict what form the world class development would take.

Bryan Gray, chairman of the Northwest Development Agency, said: "We remain committed with all our public sector partnership to deliver a world-class scheme for this crucial development site. Our funding provision remains firmly in place."